We have a client who has put £325k into a discretionary trust with her three children as the trust's beneficiaries.
Our client & her husband are the two trustees & the money in the trust has been invested in a share portfolio. Our client has personally paid the trust's income tax & CGT rather than using the trust's funds.
If our client died within 7 years of putting the money into the trust, would there be any IHT implications on the trust's taxes she has paid personally? She has paid three years' worth so far, totalling around £15k. Is she due this money back from the trust's funds (which would therefore increase her estate) or, as a trustee is responsible for paying a trust's tax (per HMRC's guidance), is this therefore ignored for IHT purposes on her estate?